Study: Not-for-Profit Hospitals Cost California Cities and Counties Over $1 billion in 2010
A recent study found a wide gap between the charity care provided by California not-for-profit hospitals, and the actual charity care they provide. Not-for-profit hospitals provide a majority of hospital beds and total patient days in California. These facilities are exempt from federal and state income taxes on profits, property taxes, and almost all state and local sales taxes. The study, by the Institute for Health and Socio-Economic Policy (IHSP), found that California not-for-profit hospitals received over $3.2 billion in government subsidies and other benefits as a result of their not-for-profit-status in 2010. However, these same hospitals provided only $1.4 billion in charity care in 2010. As a result, “California Counties and Cities lose more than $1 billion because of the tax-exempt status of not-for-profit hospitals and the inadequate provision of charity care.” The study also found that the total compensation for the top 10 CEOs at California not-for-profit hospitals exceeded $35 million.
The gap between care provided and tax-breaks enjoyed is especially alarming at a time when so many California Cities and Counties are facing severe budget shortfalls. While the news media focuses on compensation levels (and pension benefits) of civil servants, it turns a blind eye to the tax breaks enjoyed by these facilities and their high-paid executives. California Cities and Counties are obligated to provide the charity care that these not-for-profit hospitals do not, further straining already strained city and county budgets. San Bernardino County, for example, dispersed $34 million to these facilities in 2010 to reimburse them for providing indigent care.
The study recommends the establishment of a “charity threshold of 8% of operating and non-operating revenue” to keep these not-for-profit facilities from fleecing California tax-payers. Such a move would go a long way in helping to ease the budget problems of so many California Cities and Counties.
Author: Jake White
